Debt in Eritrea

Eritrea has a fragmented debt system. The Bank of Eritrea supervises the banking sector. The Commercial Bank of Eritrea and the Housing and Commerce Bank of Eritrea are the two central commercial banks, while the Eritrean Investment and Development Bank is another banking institution. Formal borrowing includes business, trade, housing and construction loans, as well as mortgages. Banks generally require security, interest rates are high, and reliable public information about rates, eligibility and rescheduling is limited. Foreign investors cannot depend on a broad local-credit market. The financial infrastructure restricts how debt is obtained and repaid. Eritrea has no foreign banks or correspondent-bank network, no established ATM or card infrastructure and no available mobile-money system. Banking operations are often manual, account, foreign-exchange and withdrawal limits can apply, and cash remains dominant. Microcredit provides a separate formal or semi-formal source of credit. The Savings and Micro-Credit Program has operated since 1996 and has focused particularly on rural households, internally displaced people and returnees. A 2026 government statement reported more than 70,000 active microcredit customers and more than 760 village banks covering about 70% of villages, with women making up more than half of customers. Independent verification of local interest rates, security requirements, default treatment and collection practices is not available, and access depends on the programme and area. Ukub is a rotating savings and credit community. Members make regular contributions and receive a rotating lump-sum payment, usually without interest and with group or social backing. It can help members obtain funds without a bank loan, but its current coverage, legal enforceability and consequences of missed contributions are not reliably documented. Ukub should therefore not be treated as equivalent to bank credit or as a guaranteed debt-relief mechanism. Public debt is exceptionally high relative to economic output. Available estimates place it at about 175.4% of GDP in 2021, 163.8% in 2022 and approximately 164% in 2024. Domestic debt represented about 68% of public debt in 2022. The African Development Bank reported external debt at approximately 36.1% of GDP as a ten-year average in 2026, but external-debt reporting remains partly estimated because of data and transparency gaps. Eritrea's last identified debt-sustainability analysis dates from 2019 and has not been published. World Bank and IDA lending is inactive because of repayment arrears. Eritrea may be eligible for the HIPC debt-relief process, but qualification had not begun by 30 June 2025. HIPC eligibility does not create automatic debt cancellation or restructuring. The Civil Code of the State of Eritrea 2015, attributed to the Ministry of Justice and available through WIPO, provides rules for contracts, loans, default and non-performance. Co-debtors generally owe equal shares unless legislation, customary practice or the contract creates solidarity. A solidary creditor can demand the full performance from any debtor. A contractual performance claim generally has a five-year limitation period from maturity; the general limitation period is 20 years, while interest and other periodic claims generally have a five-year period. The current applicability and official translation of these provisions should be checked for a concrete dispute. Article 1934 can allow a lender to withhold a loan item that has not yet been delivered when the borrower becomes insolvent. The Civil Procedure Code 2015 contains a fast-track procedure for money-debt collection in Articles 304 to 307. After a judgment, enforcement can include seizure and sale of movable or immovable property under Articles 406 to 487. Articles 494 to 498 address foreign judgments, while Articles 275 to 294 contain rules on court costs and poor suits. Current fees, case duration, legal-aid availability and practical enforcement capacity are not reliably published. Payment, deferral and set-off are legally possible responses to debt, but no verified current consumer-debt advice service, clearly documented personal insolvency and discharge system, standard private restructuring process or credit-bureau remedy has been identified. In practice, recovery commonly depends on the bank or creditor, court proceedings or informal negotiation.